Dreyfus Blog : Intellectual Property in the Digital Age

Trademark law has long recognized the principle of specialty, which signifies that the owner of a trademark has a monopoly on its sign only for the goods and services that the sign designates. However, application of this principle needs a further consideration in cases related to alcoholic beverages.

Article L713-3 of the French Intellectual Property Code states that “The following are prohibited, unless authorized by the owner, if this may result in a risk of confusion on the part of the public: a) The reproduction, use or affixing of a trademark, as well as the use of a reproduced trademark, for goods or services similar to those designated in the registration“.

Thus, according to the principle of specialty, two identical or similar signs may coexist as long as they do not designate the same goods and services. However, such a reasoning is challenged in cases when the French public health law is involved (Evin Law n° 91-32 of January 10, 1991).

According to Evin Law, a registered trademark designating alcoholic beverage products can be subject to a cancellation action by owners of prior trademarks even when their trademarks do not designate alcoholic beverages in the specification.

Indeed, the Evin Law prohibits propaganda and indirect advertising of alcoholic beverages. The coexistence of a “new” trademark designating alcoholic beverage and prior trademarks would be considered as a form of propaganda and indirect advertising of identical or similar trademarks designating alcoholic beverages.

In other words, if a company wishes to register an alcoholic beverage related trademark that is already in use by a prior trademark for goods other than alcoholic beverage products, it may face a conciliation procedure.

Article L.3323-3 of the French Public Health Code, a legal tool with a wide application range

The article L.3323-3 of the French Public Health Code states that: “Propaganda or indirect advertising is considered to be propaganda or advertising in favour of an organisation, service, activity, product or article other than an alcoholic beverage which, by its graphic design, presentation, use of a name, brand, advertising emblem or other distinctive sign, recalls an alcoholic beverage“.

It is on this legal ground that owners of prior trademarks designating goods and services other than alcoholic beverages may file an action in order to obtain cancellation of identical or similar post-trademarks designating alcoholic beverages.

The company named DYPTIQUE used this legal ground to obtain the cancellation of the trademark “Diptyque” registered by the company HENESSY.

The company named DIPTYQUE is the owner of two prior trademarks “Diptyque” – a French trademark designating classes 3, 14, 18, 21, 24 and 25, and a European Union trademark designating classes 3, 14 and 35.

DIPTYQUE manufactures and markets candles and scented water.

The company initiated a cancellation action against a trademark “Diptyque” registered by HENNESSY, a French cognac manufacturer, designating alcoholic products in class 33. According to Article L.3323-3 of the French Public Health Code any advertising made by DIPTYQUE is considered as indirect advertising of the products designated by the “Diptyque” trademark, which belongs to HENNESY, and is therefore prohibited

The existence of the cognac related trademark represents a real obstacle to DYPTIQUE’s business activities and makes it impossible to use its prior trademarks.

The French Court de Cassation, in its decision from November 20, 2012, ruled that “the registration of the Diptyque trademark by HENNESSY and the marketing of products under it create an obstacle to the free use of the first trademark“.

Article L.3323-3 of the French Public Health Code is therefore widely interpreted by the judges of the Court de Cassation. They do not take into consideration the fact that DIPTYQUE’s trademarks do not designate alcoholic beverage products in class 33 and do not in principle constitute prior right. This analysis leads to the conclusion that the provisions of the French Public Health Code prevails over the principle of specialty in trademark law.

This reasoning held by the High Court provides a real advantage for owners of prior trademarks that do not designate alcoholic beverages in protection of their trademark rights. However, such reasoning has recently been challenged by the Tribunal de Grande Instance de Paris in the “Cache-Cache” case.

Article L.3323-3 of the Public Health French Code, a legal tool with a narrow application range

CACHE-CACHE is a major player in the ready-made clothing market. The company owns two prior “Cache-Cache” trademarks – a French trademark and a European Union trademark. The company turned to the Court of First Instance of Paris to obtain cancellation of an application for registration of a trademark “Cache-Cache” filed in classes 31, 32 and 33 to designate alcoholic beverages.

The Court of First Instance of Paris, in its decision dated from November 3, 2017 dismissed the CACHE-CACHE case that was based on Diptyque case law. The judges ruled on favour of the defendant’s argument and decided that despite public health considerations, an in-depth analysis and an overall assessment of the situation was required.

Thus, the court concluded that CACHE-CACHE did not demonstrate “how the exploitation of its brands for women’s clothing and accessories in its eponymous boutiques and on the Internet via its websites cachecache.fr and cachecache.com could be considered as indirect advertising in favour of alcoholic beverages“. Consequently, the mere identity or similarity of the trademarks involved cannot be sufficient to serve as indirect advertising for alcoholic beverages as prohibited by Article L.3323-3 of the Public Health Code.

In other words, the second trademark designating alcoholic beverages cannot ipso facto infringe the first trademark designating other goods and services.

Thus, in order to obtain cancellation of an identical or similar subsequent trademark, it is no longer possible to rely solely on provisions of the French Public Health Code. It is necessary to demonstrate that there is actually indirect advertising that hinders the influence of the original trademark. Potential trademark’s damages can be demonstrated by proving that consumers can establish a link between the companies’ respective brands.

This decision narrows down a very broad application of article L.3323-3 of the French Public Health Code. While the restrictions contained in the article are limited in their scope, the principle of specialty and Article L.713-3 of the Intellectual Property Code are fully applicable again.

The new case law provides an opportunity for companies to register trademarks that are identical or similar to prior trademarks that do not designate alcoholic beverage products without facing a cancellation action with regard to their registration.

Subsequently, the owners of identical or similar prior trademarks that do not designate alcoholic beverage products will not be able to claim prior rights in an absolute manner on the grounds that the coexistence of trademarks would hinder their business activity, and, in particular, their advertising strategy with regard to the provisions of Evin law.

It is still unclear whether the judges of the Appeal Court and the Court de cassation will follow the reasoning of the Court of First Instance of Paris, or whether they will give a decision in line with the “Dyptique” case law of the Cour de Cassation.

The withdrawal of the United Kingdom from the European Union, either with or without ratification of an agreement, will have an impact on trademark law, domain names, and personal data alike. It is therefore necessary to understand the changes and get prepared.

1. European Union trademarks (EUTM)

EUTMs registered before Brexit will be protected automatically and free of charge by comparable trademarks in the United Kingdom (UKTM), without any loss of priority or seniority; an opt-out option is available.

A holder of EUTMs located in the United Kingdom will need to appoint a representative in a Member State for correspondence purposes.

Use of an EUTM only in the United Kingdom will no longer be considered as an actual use.

UK courts will no longer have jurisdiction over European trademarks. Only the proceedings commenced before Brexit will continue before the courts in the United Kingdom. The United Kingdom will no longer be bound by decisions of the Member States.

BUT our advice is to use your trademark in several countries and not only in the United Kingdom.

If your trademark protection is about to expire, renew it before Brexit in order to automatically benefit from equivalent protection in the United Kingdom.

If you applied for an European trademark and your application has not yet been accepted:

Try to obtain the registration before Brexit. If it is not possible, you will still benefit from a 9-month priority period when you will be able to apply for an equivalent trademark in the United Kingdom without any loss of priority or seniority.

BUT anticipating trademark registration in the UK is useful in order to obtain prior rights in the EU and the UK, and to anticipate administrative delays due to an increase in number of UKTM trademark applications.

If you have initiated a trademark dispute proceedings :

Resolve ongoing disputes that you initiated before the date of the exit of the United Kingdom. The outcome of the dispute concerning a European trademark will impact all the countries concerned, including the United Kingdom.

If you are a defendant in a trademark dispute :

Wait for the effective date of the Brexit. The resolution after Brexit could allow retaining the trademark in the United Kingdom, while a resolution before Brexit will simply open the possibility for initiating the procedure in order to convert a European trademark into a UK trademark.

Consider filing separate actions in the European Union and the United Kingdom. A custom strategy would be required for each individual case. An in-depth study will have to be carried out to determine the necessary procedures. Dreyfus advises you on the best strategy to adopt in your particular case.

2. United Kingdom brands (UKTM)

Trademarks registered in the United Kingdom can no longer be used as prior rights in proceedings against European trademarks.

Dreyfus advises you to:

Register European trademarks now to obtain rights in the EU and protect your rights in the United Kingdom and the European Union.

3. International brands (WOTM)

International trademarks designating the EU will be treated same way as European trademarks.

European trademark owners residing in the United Kingdom will no longer be able to apply for international trademarks based on European trademarks.

Dreyfus advises you to:

Register international trademarks on the basis of your European rights, in order to obtain global protection.

With the adoption of the Data Protection Act 2018, together with the GDPR in the UK the level of personal data protection requirements is expected to remain unchanged. In the event of a withdrawal agreement governing Brexit, the GDPR would become a provision of the United Kingdom domestic law.

However, the change of the United Kingdom’s status will have practical consequences for controllers and processors.

Data controllers and processors will have to appoint a representative in the EU if they carry out processing activities related to persons in the EU.

Transfers of personal data between the United Kingdom and EU Member States will no longer be unrestricted. As a third country, the United Kingdom could seek to benefit from an adequacy decision recognizing it as a state with an adequate level of protection of personal data. Otherwise, the transfer can only be made after appropriate security measures for personal data are put in place.

Dreyfus advises you to:

Limit transfers to/from the United Kingdom to what is strictly necessary.

Monitor the transfers to ensure that they comply with the provisions of the GDPR, for example by using “standard data protection clauses”.

Mention the transfers in the information notices to the data subjects.

It was after a lengthy procedure that the French Supreme Court, the Cour of Cassation, in its judgment delivered by the Commercial Chamber on November 14, 2018, held that there was no likelihood of confusion between the prior mark ECOLAB and the contested mark KAIROS ECOLAB.

Ecolab USA Inc, owner of the earlier trademark “ECOLAB”, had filed an opposition to the application by KAIROS. for registration of the French trademark “KAIROS ECOLAB”. Ecolab USA Inc. based its claim on its international word trademark “ECOLAB” designating the European Union and registered on April 6, 2009. The company could also claim priority because of a November 26, 2008 German registration.

The trademark “KAIROS ECOLAB” has been registered by SARL Kairos, which has an ecological laboratory for which it uses this trademark.

The opposition filed by Ecolab USA Inc. was rejected by the INPI Director on August 8, 2013.

The Paris Court of appeal, in its judgment of April 25, 2017, which was held on remand after the first decision in appeal had been quashed by the Court of Cassation, , rejected again Ecolab USA’s opposition by demonstrating that there was no likelihood of confusion between the trademarks “ECOLAB” and “KAIROS ECOLAB”. Ecolab USA Inc. lodged an appeal against this decision to the French Supreme Court.

In its judgment, the French Supreme Court clarifies the assessment of the likelihood of confusion when dealing with a prior trademark composed of a term (here Ecolab) and a later trademark composed of a juxtaposition of the same term (Ecolab) and a new term corresponding to the applicant’s corporate name (Kairos).

The Court reiterated that the French Intellectual Property Code, in Article L713-3(b), prohibits the imitation of a trademark and its use, for goods or services identical or similar to those designated in the registration, if this may result in a risk of confusion on the part of the public.

Furthermore, the Court of Justice of the European Union, in its judgment LIFE / THOMSON LIFE (C-120-04), interpreted Article 5 of Directive 89/104/EEC of December 21, 1988 as meaning that a likelihood of confusion may exists in the mind of the public in the event of the identity of the goods or services, where the contested sign consists of the juxtaposition, on the one hand, of the name of the third party’s company and, on the other hand, of the registered trademark, which has normal distinctive power, and which, without creating by itself the overall impression of the composite sign, retains in the latter an autonomous distinctive position.

The French Supreme Court stated that the Court of Appeal had violated Article L713-3 of the French Intellectual Property Code, by holding that the trademark “ECOLAB” did not retain an autonomous distinctive position within the sign “KAIROS ECOLAB”.

The Court of Cassation noted that the contested trademark consisted of the juxtaposition of the earlier trademark with a company name, “Kairos”. This corporate name is a perfectly arbitrary term placed in a position of attack in the contested trademark and has an important semantic value.

The French Supreme Court held however that “while the term “Ecolab” has its own distinctive character evoking an ecological laboratory, the term “Kairos”, which is perfectly arbitrary, refers to the corporate name of the eponymous company and is placed in a position of attack, has an important semantic value which is superimposed to the term “Ecolab” to form a conceptually different whole from the earlier trademark by referring to the ecological laboratory of the company Kairos, which is precisely identified , so that it constitutes a whole unit having a different meaning with respect to the meaning of said elements taken separately”.

Consequently, the juxtaposition of the corporate name “Kairos” with the term “Ecolab” forms a conceptually different whole, “KAIROS ECOLAB”, compared to the prior trademark “ECOLAB”. There will therefore be no likelihood of confusion in the minds of the public between the two trademarks. The public could therefore not believe that the contested trademark is be a version or an adaptation of the prior trademark.

It should therefore be noted that even if there is an identity or a similarity between the goods and services, such a juxtaposition, because it forms a conceptually different whole with respect to the prior trademark, will make it possible to avoid the risk of confusion in the minds of the public and consumers. The juxtaposition can thus be registered at the INPI as a trademark for the goods and services it designates.